Gas dispute may hurt Russia

Vladimir Putin could be blamed if cutting off Ukraine turns into shortages in Europe.

January 2, 2006|By Kim Murphy, Los Angeles Times

MOSCOW -- As Russia assumed the presidency of the Group of Eight industrial nations Sunday, an energy showdown with Ukraine that also jeopardized European natural-gas deliveries threatened to undermine Moscow's attempt to be seen as a reliable new global energy supplier.

Russian engineers closed the valves on natural gas to Ukraine within hours of Moscow's ascension to the G-8's rotating presidency, a post the country won because of its status as a world leader in energy production. Hours later, supplies to Poland, Slovakia and Hungary also were diminished slightly.

The cutoff unleashed a political crisis in Ukraine and threatened to turn into a major misstep by Russian President Vladimir Putin, who undoubtedly will shoulder much of the international blame if wintertime energy supplies to Europe are interrupted over his nation's pricing dispute with Ukraine.

Russia is still only a junior partner aspiring to full membership status in the G-8. Its very presence in the elite "club" of developed nations is due not to the status of its economy, which ranks well below the other members', but to its rank as the top natural-gas producer in the world and a leading oil producer, analysts said.

Putin repeatedly has emphasized his commitment to energy "security," which Russia insists it can provide more reliably than the nations of the conflict-ridden Middle East.

Both Russia and Ukraine blamed each other for what appeared to be a slight reduction in the pressure of Russian gas flowing to Europe, which receives about 30 percent of its gas from the Russian state-controlled energy giant, Gazprom.

As Poland and Hungary reported slight drops in pressure on their own gas lines, Gazprom officials accused Ukraine of siphoning off supplies intended for Europe. Ukraine, which insists it is entitled to a certain amount of gas under its contract for shipping Russian gas to Europe, said it had made no illegal diversions.